Carney on ‘Kudlow’: The Fed Might Hike Rates in June Instead of Pausing

Even though Wall Street is betting on an interest rate cut, the Federal Reserve could hike rates at its next meeting in June, Breitbart Economics Editor John Carney told Fox Business Host Larry Kudlow on Friday.

During a Wednesday appearance on Kudlow’s show, Carney and Kudlow agreed that this week’s consumer price index data gave Fed officials cause to pause their rate hikes at the next Federal Open Markets Committee meeting in June. But Carney offered a caveat to that prediction in his Friday interview.

“I’m not sure they are going to pause,” he told Kudlow.

Carney pointed to Federal Reserve Governor Michelle Bowman’s speech on Friday, which he reported on in the latest Breitbart Business Digest:

In a speech delivered at a European Central Bank conference in Frankfurt Friday, Federal Reserve Governor Michelle Bowman signaled that the market had misread how the data looked to Fed officials.

“In my view, the most recent CPI and employment reports have not provided consistent evidence that inflation is on a downward path, and I will continue to closely monitor the incoming data as I consider the appropriate stance of monetary policy going into our June meeting,” Bowman said.

While Bowman was officially speaking only for herself, it is clear that there is a growing group of Fed officials who anticipate that further hikes might be required to bring inflation back in line with the Fed’s two percent target. What’s more, Bowman’s perspective carries extra weight because she is not seen as particularly hawkish. In fact, many think her views are likely to align with those of Chairman Jerome Powell.

“I think [Fed officials] still think they can pause in June, but I think they may end up returning to hiking in July,” Carney told Kudlow.

“I think the argument for not pausing in June is that the market is still pricing in cuts as early as July, and if the Fed wants to push them off of that position, the best way to do that would be one more hike because nobody’s expected that,” he added.